another report about the coming gas shortage

..... , higher gas prices and "innovative" ways to take advantage of it.

One more evidence why I am bullish on BUL.


http://www.smh.com.au/business/mining-and-resources/gas-companies-accused-driving-prices-higher-20131014-2vi4y.html#ixzz2hhWypYzu



Gas companies accused driving prices higher


Gas companies have been accused of leaving gas in the ground that could be profitably sold today, so they can sell the gas more expensively in the future.

The claim comes as gas prices along the east coast are forecast to rise to international levels in the wake of the development of a string of export gas projects in Queensland.

This has already driven the price of gas for some large industrial users to $9 a gigajoule from 2016, up 50 per cent.

‘‘An oil company that expects to sell ... LNG [liquified natural gas] at a price of $14.85 ma unit in 20 years time would be better off if it secured $3 for that same unit of gas in the domestic market today,’’ Mr Mike Lauer, director of Gas Trading Australia told the Australian Pipeline Industry Association Monday.

‘‘The overwhelming focus of our oil and gas producers on big, exciting and sexy LNG developments has come at a substantial cost to resource allocation in Australia.

‘‘This focus has seen oil company executives decline to profitably sell gas in domestic markets today so that the gas can be reserved for sale in fifteen or twenty years as LNG.’’

An example is the Northern Territory, where over 150 PJ of gas is brought into Darwin each year and exported to Japan.

‘‘Apparently there was not 12 PJ to 20 PJ of gas per annum available to supply Channel Island, twelve kilometres away from the LNG plant, because the gas was needed to supply LNG in the plant’s seventeenth contract year,’’ he said.

‘‘It beggars belief that there was no price at which such small volumes of gas could be liberated from the LNG project.

Instead, the Northern Territory is sourcing gas further afield, from Bonaparte Gulf and has had to underwrite a $130 million pipeline to deliver the gas to Darwin.

‘‘On face value it would be hard to find a better example of gross resource misallocation,’’ he said.

His comments came as pipeline owner and operator Jemena said government must be prepared to intervene to prevent ‘‘demand destruction’’ among some gas users in the case where the gas price spikes, which would put trade exposed industries which use large volumes of gas at risk.

‘‘Temporary, targeted government assistance for trade exposed industries would be justified to ease transitional pressures,’’ Jemena executive director Mr Shaun Reardon said.

The South Australian government flagged spending will surge to a ‘‘conservative estimate’’ of $3.5 billion over the next five to seven years on the Cooper and Eromanga basins of central Australia in the wake of the Queensland export gas projects.

It also forecast a more than six-fold rise in the number of wells drilled from the 33 drilled in South Australia in 2012.

The SA minister for Mineral Resources and Energy, Mr Tom Koutsantonis, said there is a ‘‘reasonable expectation that petroleum well drilling activity will increase beyond 200 wells in just five years’ time’’.